January 6, 2022 Lauri Stone

Higher Ed Finance Professionals Need Better Workflow Tools to Help Keep Costs Down

Budgetary planning for higher education institutions is never an easy process during even the best of times. With the instability of our current world, organizations are facing additional challenges in their planning and forecasting processes.

Institutions have been forced to prepare for sharp declines in public funding and tuition revenue. Demographic shifts, constraints on international revenue sources, and the rapid shift to online learning– substantially changed our world, have presented both opportunities and challenges.

Institutions remain uncertain about enrollment numbers and face increased cost in operations due to the need to address immediate COVID-19 impacts and invest in alternative ways to deliver instruction. And, unlike the years following the 2008 recession, institutions cannot expect to fill budget holes by raising tuition, owing to concerns over the already high cost of tuition and student debt burden. This presents quite a quandary.

Higher ed’s financial challenges go deeper than declines in enrollment and operating revenues.

-University Business, February 2021

College and university leaders are challenged with what feels like an impossible task: cutting institutional budgets while maintaining or even strengthening core capacity to achieve their strategic priorities. Systems and institutions across the country are focused on simply trying to balance budgets rather than being focused on strategic priorities for change. In doing so, the emphasis is on preserving how higher education currently does business rather than moving systems and institutions forward. This marriage of short-term solutions with long-term challenges cannot address the underlying systemic and structural challenges that existed even before COVID-19 arrived.

“It is time to recognize that past practices for allocating resources and balancing budgets no longer fit with contemporary reality. A new strategic finance framework is needed to guide decisions about both how to cut and invest in higher education. This orientation departs from existing budget modeling exercises, where the emphasis is on raising the necessary revenues to continue business as usual and shifts the focus from internal institutional demands to external student needs, budget balancing (“Do I have enough?”) to return on investment (“What do I get from what I have?”), legacy and internally defined academic program offerings to externally focused and data-informed academic and service portfolios.”  (Inside Higher Ed, August 2020)

 

Fall enrollment numbers keep falling

The final fall 2020 enrollment estimates from the National Student Clearinghouse Research Center reported fall undergraduate enrollment dropped 3.6% compared to 2019 with steep declines in enrollment at community colleges, which saw a decrease of 10.1%, and freshman enrollment, which dropped 13.1% nationally and 21% at community colleges. 

The pandemic upended higher education budgets, which have been tenuous from the start. Most institutions have variable revenue streams that fluctuate every year but a fixed cost basis that does not.

Tuition and fees tend to contribute slightly north of 20% of total revenue at public, four-year institutions, and slightly more than 30% of total revenues at private nonprofits, per data from the Integrated Postsecondary Education Data System.

The other 70% to 80% comes from auxiliary revenues (e.g. room & board), government grants and contracts, investment and endowment returns, gifts, and state and federal appropriations. COVID has devastated these additional revenue streams, which are volatile in the best of circumstances, and it’s no longer viable to increase tuition and fees. (University Business, February 2021)

 

Technology provides ways to help cut corners for the budget

Software was developed specifically for higher education that streamlines the recruitment and applications processes that cuts staff and faculty manual processes by 50%. That’s a lot of savings to the budget alone. Through its advanced technology, the platform called simply, REUApp has many features such as diversity and inclusion filters, tickler/reminder systems, templates, rating systems, and data mining that lightens the load for a variety of departments at any higher ed institution.

Since its launch, the REUApp has been very well received as it continues to add more features. The ease of use, no need for IT, no software to download nor licensing fees or contracts makes this application the only real automated option.  Automation vs manual processes = savings.

If you manage university finances and would like to explore the ways this software can lower budgets, click here to learn about the REUApp.

Or better yet, schedule a quick demo and access the REUApp calendar here.

 

Sanmita is an award-winning strategy, design and technology firm with over 15 years’ experience in working with higher education. Check out our projects, great testimonials from major universities, and our exceptional leadership team.

Lauri Stone

Lauri Stone is Director of Client Relations at Sanmita, Inc., a web design and development firm offering strategy, design, and technology services to higher education, government, and nonprofit entities. She comes to Sanmita with over 25 years of experience in media marketing and advertising and is located in Los Angeles, California.